FLOWCHART: TAXABLE SUPPLIES SECTION 9-5

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Rodger Bishop
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1 Taxable Supplies and Importations FLOWCHART: TAXABLE SUPPLIES SECTION 9-5 HAS A SUPPLY BEEN MADE? HAS A TAXABLE IMPORTATION BEEN MADE? WAS THE SUPPLY MADE FOR CONSIDERATION? WAS THE SUPPLY MADE IN THE COURSE OR FURTHERANCE OF THE ENTITY'S ENTERPRISE? WAS THE SUPPLY CONNECTED WITH AUSTRALIA?* See other flowchart NO GST IS PAYABLE IS THE SUPPLYING ENTITY REGISTERED OR REQUIRED TO BE REGISTERED? IS IT WHOLLY GST-FREE OR INPUT TAXED? A TAXABLE SUPPLY HAS BEEN MADE. GST IS PAYABLE *The Act actually refers to "Indirect Tax Zone" Seminars Australia TSP 3

2 Taxable Supplies and Importations Compound and Mixed Supplies A compound (or composite) supply is a supply where there are several items or elements constituting the one supply, which, if those elements had been supplied separately, some would have been taxable and others not o generally speaking, GST is charged according to the nature of the aggregate value of the compound supply E.g. food packaging is GST-free if supplied with GST-free food. Combinations of GST-free food and taxable food are taxable in its entirety. rmally taxable bandages from a chemist are GST-free if supplied with a GST-free medical service. A mixed supply is a single transaction that involves a number of separable goods or services, and thus each separable item is treated separately for GST purposes: GSTD 2002/3 Part of a supply need not be separately recognised for GST if it is "integral, ancillary or incidental" to another part of the supply. As a rule of thumb if that part is not more than the lesser of $3 or 20% of the total consideration, although this test is not exhaustive, and any reasonable method of apportionment may be used: GSTR 2001/8 Apportionment would not be required (for example) (1) a cleaning brush provided for a medical appliance; (2) journals provided with CPA membership to non-residents; (3) newspapers provided to hospital patients. Apportionment would be required (for example) (1) food supplied to a border at a university college; (2) a coffee plunger sold together with a jar of coffee; (3) membership of a gym when provided with health insurance; (4) delivery of goods sold Seminars Australia TSP 5

3 Taxable Supplies and Importations Donations, Gifts and Sponsorships Determining whether donations, gifts or sponsorships are consideration depends on whether: o the funds are considered to be an unconditional donation; and o the funds are paid in return for goods and services or rights. Making a gift to a non-profit body is not the provision of consideration: s9-15(3)(b) Time Out: Examples A GST-registered charity is given $2,200 sponsorship by a local business in return for acknowledgement in its newsletter. GST is payable by the charity and the business receives an input tax credit. A religious institution collects $150 in the collection plate. The collection is a donation and is not subject to GST. A charity sells tickets to a fund raising dinner. The tickets cost $110 per head. The supply of the tickets is taxable as the funds received are not unconditional donations. GST of $10 must be paid to the ATO. A guest speaker is given a token of appreciation for delivering a speech at a dinner. Generally, such a token would not be consideration unless it is in the nature of remuneration: GSTD 2002/ Seminars Australia TSP 13

4 Special Rules Category Certain Financial Services Div 70, Reg 70-2 Fringe Benefits Provided by Input Taxed Suppliers Div 71 n-deductible Expenses Div 69 Special Rules Partial ITC A partial input tax credit of 75% is allowed for certain acquisitions by financial suppliers. (See later notes.) Generally ITC Acquisitions/importations that solely or partly relate to making supplies that are input taxed are not creditable acquisitions if they relate to providing fringe benefits in respect of which FBT is payable If it were not for this rule, the higher FBT gross up factor would apply even where the provider of the benefit was only entitled to a partial input tax credit. Instead, the lower gross up factor applies. The fringe benefit must have a taxable value greater than zero in order for an input tax credit to be denied under this Division: 71(5)(1)(b). however, GST credit may still be denied under s11-15 (general provision). Threshold Rule does not apply to acquisitions/importations to make financial supplies where the financial acquisitions threshold is not exceeded. See GSTR 2003/9 regarding financial acquisitions threshold. Income Tax Deduction = ITC If any of the following items are not income tax deductible, then such items are not creditable acquisitions/importations and thus no ITC is available: o fines and penalties: s26-5 ITAA97 o relative s travel expenses: s26-30 ITAA97 o maintaining your family s26-40 ITAA97 o recreational club expenses: s26-45 ITAA97 o expenses for a leisure facility or boat: s26-50 ITAA97 o entertainment expenses: Division 32 ITAA 1997 o entertainment expenses: s51aea, 51AEB, 51AEC ITAA36 o non-compulsory uniforms: Division 34 ITAA97 o agreements for the provision of non-deductible non-cash business benefits: s51ak ITAA36 Fringe Benefits However, some of the above items, despite being non-deductible expenses, are tax deductible where they are provided by way of fringe benefit by an employer to an employee Income Tax Exempt Bodies If the entity making the acquisition or importation is exempt from paying income tax, the acquisition or importation is a non-deductible expense if it would have been a non-deductible expense had the entity not been an exempt entity: s69-5(4) SPL Seminars Australia

5 GST-Free Supplies Education: Subdivision 38-C Sub-Topic Basic Rule Definition of Education Course Details The supply of an education course and the supply of school facilities and administrative services required for the delivery of that course is GST-free. 1. A recognised pre-school, primary school, secondary or tertiary. See also A New Tax System (Goods and Services Tax) (Language Other Than English - LOTE - courses offered by ethnic schools) Determination A special education course that provides special programs designed specifically for children with disabilities or students with disabilities (or both). See GSTR 2002/1; 3. An adult and community education course. See also GSTR 2000/27, A New Tax System (Goods and Services Tax) (Adult and Community Education Courses) Determination An English language course for overseas students; 5. A first aid or lifesaving course 6. A professional or trade course. However, a qualification will not be GST-free merely because it is required by a particular employer. For example, a motor vehicle driver s licence is a requirement of a number of jobs. The cost of driving lessons is not GST-free. A distinction is to be made between courses undertaken to obtain qualifications and courses undertaken to maintain them. Courses to maintain qualifications such as undertaking continuing professional development to retain membership of a professional body are not GST free. See GSTR 2003/1 for comprehensive ruling on professional or trade courses. Certain commercial pilot training courses are GSTfree: GSTD 2000/11 7. A tertiary residential college course. See GSTR 2001/1). EXM Seminars Australia

6 Accounting & Documentation William Goetz Pty Ltd ABN Martin Place Sydney NSW July 2017 Supplier: Your Company Pty Ltd 25/240 Hard Drive Pentium Tas 7001 ABN RECIPIENT CREATED TAX INVOICE Quantity Description Unit Price Total 1 Tonne Computer Bugs $1,000/tonne $1,000 1 GST $100/tonne $100 Total Including GST $1,100 The GST shown is payable by the supplier. The recipient and the supplier declare that this agreement applies to supplies to which this tax invoice relates. The recipient can issue tax invoices in respect of these supplies. The supplier will not issue tax invoices in respect of these supplies. The supplier acknowledges that it is registered for GST and that it will notify the recipient if it ceases to be registered. The recipient acknowledges that it is registered for GST and that it will notify the supplier if it ceases to be registered for GST. Acceptance of this RCTI constitutes acceptance of the terms of this written agreement. Both parties to this supply agree that they are parties to an RCTI agreement. The supplier agrees to notify the recipient if the supplier does not wish to accept the proposed agreement within 21 days of receiving this document Seminars Australia ACC 17

GST & FBT. School of Medicine. Agenda GST FBT. GST Basics Receivables Donations. Payables Compliant Tax Invoices Types of Transactions

GST & FBT. School of Medicine. Agenda GST FBT. GST Basics Receivables Donations. Payables Compliant Tax Invoices Types of Transactions GST & FBT School of Medicine GST GST Basics Receivables Donations Payables Compliant Tax Invoices Types of Transactions FBT Taxable Benefits Entertainment Agenda 1 GST Basics GST is a broad based consumption